What are the pros and cons of a C Corp and S Corp versus an LLC? Calculate, calculate, calculate because it’s possible to pay dividends out that are not going to be taxable to you.
Toby Mathis and Jeff Webb of Anderson Advisors answer your tax questions. Submit your tax question to taxtuesday@andersonadvisors.
- Do corporations get taxed double? What are the pros and cons of a C Corp, S corp, and an LLC? Double taxation means the C Corp’s getting taxed on its income. When it pays out dividends, the shareholders are getting taxed on those dividends. Also, LLC is not a tax designation. An S Corp is similar to a partnership. It has stricter rules about who can be shareholders of your S Corp and it passes through its income expenses down to the shareholders. A C Corp is its own entity/being.
- I own a childcare center that is set up as a corporation and taxed as an S Corp. It has a line of credit of $150,000. I’m a new real estate investor and would like to know if I can lend those funds to myself to purchase a house to buy, repair, rent, refinance, repeat (Brrr) or fix and flip? Yes, you could do that, but make sure there are promissory notes between the S corporation and borrower. However, you do have to repay that money to the S Corporation. Document it, and then honor the document.
- I just received a notice from the IRS asking me to pay taxes on the money withdrawn from my retirement under the CARES Act in 2020. I thought I had three years to pay back the money withdrawn in 2020, which means I still have 2022 to pay back the money that was withdrawn. How do I proceed? You have until 2022 to repay this distribution. However, the IRS technically wants you to pay back taxes on a third of that distribution each year.
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Full Episode Transcript:
Toby: Hey, guys. We’re just going to go ahead and get started. This is Tax Tuesday. My name is Toby Mathis, and…... Read Full Transcript
Jeff: I’m Jeff Webb.
Toby: And we’re going to be giving you as much as we can as far as answers to tax questions and other philosophical questions that are out there. We do recommend that you’d have a little bit of wine—it helps—and not the three-year-old variety but the actual adult libation.
Here’s what we do. We have a few rules. We have a live Q&A. At my end it says question and answer, it might say Q&A on your Zoom board. If you go there, you can ask very specific questions that are kept confidential to you.
We have Eliot, tax attorney, Dana, Troy, Matthew, Dutch. My gosh, we have everybody and their mother today. Piao, Ian, Christos. We have a couple of CPAs, tax attorney, accountants, and all sorts of good people on, including the head of our bookkeeping.
If you have a question, make sure that you ask today. Go into that question and answer feature (Q&A). This is a really good day to be asking questions.
Hey, where are you at today? Where are you located physically? Not in a bizarre state of mind. Let’s just say where are you physically? We see Orlando. We see Mooresville, North Carolina. Where’s everybody? City and State. Give an idea of where everybody’s running around at today. Miami, Boise, Killeen, a bunch of Texas, Washington State, Annapolis, more Dallas, Georgia, Santa Monica, San Francisco, Jacksonville, New Hampshire.
Jeff: Make sure you’re putting that in the chat feature not the […] feature.
Toby: You put it in chat. All right, Chicago. Philly, that’s my hometown, chilling in Biloxi with you, bro. That’s good. Straightest state of Texas, Arizona, Jacksonville, Dallas, Delaware. We got people all over the country today so that’s good. Thank you for joining us. Hopefully, this will be fruitful for you. You’ll learn a bunch of good stuff.
If you have very, very detailed questions about your personal taxes, we’ll answer the general stuff here, but if you get into stuff where you actually need prep done and things like that, then please become a client. If you’re a platinum, you could ask very detailed questions about yourself and it doesn’t cost you anything. You can do that in your platinum portal.
If you don’t know what platinum is, say hey, in the chat, I don’t know what platinum is. I’d love someone to talk to me about it. That’d be great. Then we can get somebody talking to you. Platinum is real simple, $35 a month. You could ask all the questions you want both on the legal side and then written questions to the accountants. We do it written because we know you guys will ask the same question every year. We’d like to make sure that it’s in writing so that you can look at it the following year.
All right, open questions. We have a whole bunch today so we’re gonna jump through it.
“I bought NFTs in 2021 and in early 2022 with the hopes of selling them to make a profit. Unfortunately, the ones I bought have no secondary or resale market value and are essentially worthless. How can I account for the money that was invested and is now gone?” We’ll go over that one.
“Do corporations get double taxed? Pros and cons of a C-Corp, an S-Corp, and an LLC?” A pretty open question there. We’ll get into that.
“I’m starting a boat rental business. Is the purchase of the boat able to be written off the first year? Can it be spanned over five years?” Jeff, I hope you know the answers to all these because I’ll be mailing it in today.
“I own a childcare center that is set up as a corporation and taxed an S-Corp. It has a line of credit of $150,000. I’m a new real estate investor and would like to know if I can lend those funds to myself to purchase a house? To buy, repair, rent, repeat, or refinance, or fix and flip.” When they say BRRRR that usually stands for buy rehab, rent, refinance, and repeat, so we’re missing an R there. Either they’re not going to rent it or they’re not going to refi it. No, I’m just teasing. It’s BRRRR.
“If a California resident owns rental properties and/or multifamily syndication in other states,” we got to keep that in mind on that syndication, “such as Arizona and Atlanta,” Atlanta is not a state. But anyway, we’ll get into that, “with net operating loss and a K-1 net rental loss, does he/she need to file an income tax return in those states despite the dollar filing threshold?” I don’t know what that means, but we’ll get into it. “Can he/she wait until they turn a profit or capital gain to file cumulatively?” We’ll answer your question, although we’d love it if you picked a gender.
“I, a US citizen, want to start a foreign business with a partner who is a foreigner. Besides the foreign country rules for setting up the company, what is the best way to set it up so that I do not have US tax hassles? I would be a minority owner. What is the threshold for ownership to not have a US tax nightmare? What are the requirements? Do you have a video on the subject?” Interesting question.
“I bought a property for the purpose of subdivision without renting it out in 2016, and I didn’t report it on my tax for depreciation or any deduction. Can I catch up on all depreciation for 2021,” sounds like they haven’t used it for anything for five years, “with cost segregation and not bonus,” I know, “without going back to amend prior year tax returns?” We’ll talk about that one. Jeff, hopefully, you know the answer going like this.
Jeff: You’re just reading questions today?
Toby: I’m just reading questions and drinking a coffee. “I just received a notice from the IRS asking me to pay taxes on the money withdrawn from my retirement under the CARES Act of 2020. I thought I had three years to pay back the money withdrawn in 2020 which means I still have 2022 to pay back the money that was withdrawn. How do I proceed?” Good question. Jeff is going to answer that.
“I bought a house in 2015 and I’ve lived there for about two years, then moved out of state. I let my cousins stay,” that was your first mistake right there. You got cousins. They’re not going to leave, “and take care of the house for me. I recently refinanced my house with a cash-out option. Now the new loan is under rental property last December 2021.
By listening to your video about exclusion when we sell our primary home, my question is if I convert my house back to a primary home, can I still qualify for that exclusion when I sell my home in the future?” It looks like it was purchased for $600,000 and now it’s worth $1.2 million, so congratulations on a lot of appreciation. We will address your tax questions as well.
Somebody says, “Would you do one question at a time?” We will. We always read them in the beginning so you guys see all the questions we’re gonna go over, and then we’ll go through them one at a time.
“I owned a rental property for 27 years. If I move back into it and make it a primary residence, then sell it after three years, can I legally avoid depreciation recapture upon sale?” Good question, which we’ll answer.
“I am 67 years old. If I do a Roth 2022 conversion, can I commingle the Roth conversion into an existing Roth self-directed IRA? Are there any potential negative consequences to doing this? Does the five-year rule reset for the entire Roth or just the conversion amount?” Jeff will be answering that.
Speaking of Jeff answering things, if you like these types of questions and we’re going to go through the answers, but if you like saying hey, I didn’t even think of that, go to our YouTube channel. It is absolutely free and there’s the rotating red or flashing red. Go on in there and subscribe. It’s absolutely free.
We put up probably two or three videos a week on a whole bunch of topics. In fact, there’s a whole bunch listed there. Let’s see, how to transfer real estate from C-Corp to an LLC? Is retirement income considered passive or active? How to reduce taxable income? There’s a whole bunch in there. Plus, we post all of our Tax Tuesdays, and if you’re watching this on YouTube, you know that we do our livecast here.
All right, Jeff. “I bought NFTs (non-fungible tokens) in 2021.” That’s what NFT is, and not a Bored Ape. Those are the ones that are worth millions of dollars. This does not sound like a Bored Ape. It’s a boring grape. They thought that maybe it was something because it sounded so similar. “In early 2022 with hopes of selling them to make a profit.” They bought some NFTs. It sounds like they didn’t create it themselves, they bought it. This is important. “Unfortunately, the ones I bought have no secondary or resale market value and are essentially worthless. How can I account for the money that was invested and is now gone.” What say you?
Jeff: I will let you know that the IRS has been good enough to provide us zero guidance on NFTs.
Toby: That just doesn’t sound like the IRS that I know. They’re so good about telling us exactly what the rules are.
Jeff: How long did it take them to get us info on crypto? Five or six years after it came out?
Toby: There is one bit of guidance one and I think it’s a […] and they explain here’s how we’re going to treat these two or three things and then everybody’s extrapolating. So guess. What do you think that end now?
Jeff: We may have different opinions here. I’m thinking that the IRS is going to treat this, since you’re unable to sell it, as a personal asset. Whereas on the other hand, you think it’s an investment and you could probably treat it as a capital loss for the entire match you invested in.
Toby: Yeah, the guidance that we have thus far. There’s no specific guidance, but the tax courts, tea leaves, and all that good stuff in comments, is that NFTs are essentially capital assets, that are gonna be treated as collectibles.
Collectible is just a fancy way of saying, if you sell it after a year, you’re going to be taxed at up to 28% instead of up to 20%. It’s taxed as an ordinary bracket up to 28%. Once you hit that 32%, you magically revert to 28%, and that’s what you pay if you make money. If you don’t make money, I think it’s a capital loss. Capital losses offset capital gains with the exception of that $3000 a year that can be used to offset other income.
This is not somebody who created their NFT. That’s a whole other nightmare because the IRS wants to tax the creation of the NFT unlike anything else. If somebody says, hey, this sounds like a gambling or entertainment expense. If I were to paint a new work of art, I wouldn’t get taxed on the creation of that work of art. If you create this capital asset, the IRS is of the position of it kind of like mining, that they want you to perhaps pay tax on it.
Jeff: I was just going to say it does resemble crypto mining.
Jeff: When you create the asset, you get taxed on it.
Toby: I think that’s how they’re going to treat it. I think that NFTs are going to get the same treatment as crypto which is treated as capital. The only difference is that they treat NFTs as collectibles. Although, I would argue that some of those cryptos are more like collectibles than they are like real virtual currency.
I think if you invested in it—and this is what it says, “I bought it for an investment,”—I think you’re going to have a capital loss, and that’s how I would treat it. I don’t think you’re going to have any guidance that says otherwise. Then who knows what the IRS comes out and ultimately gives us. There might be a revenue procedure on it, maybe we get something, what do you think?
Jeff: I think they’re going to give us some guidance. It kind of feels like they’re going to wait and see what the market does. That’s really curious because, unlike crypto, NFT, they’ve found that the vast majority of them are worthless. There have been billions thrown into NFTs that may not have any value at all, and I’m not going to say I told you so.
Toby: Maybe. Somebody says it does sound like gambling or an entertainment expense. To a certain extent, it is a little bit like gambling because when they win they win huge. Like those bored ape things are millions. It depends. I look at it like it is a piece of art. Do you take losses on art? I buy a Picasso and it goes down in value?
Jeff: I think that would be hard to do if you still own the art.
Toby: Personal assets, you don’t get to write off assets. If you show that it was like a part of a business, I imagine you might be able to. We’ll see. That’s not one of our questions for today so we’re going to give it a hard pass.
“Do C-Corps get taxed double? Pros and cons of a C-Corp, S-Corp, versus LLC?
Jeff: Let’s talk about double taxation first. That was really a prevailing talk when C-Corps were being taxed up 35%, actually up to 39%. By double taxation, they mean the C-Corp is getting taxed on their income. When they pay out dividends, the shareholders are getting taxed on those dividends.
Toby: It used to get taxed as ordinary income.
Jeff: Yes. Now, it’s almost always taxed as capital gain income, long-term capital gains. There is that it’s not as bad as it sounds. Like you always say, calculate, calculate, calculate, because it’s possible to pay dividends out that is not going to be taxable to you personally. Of course, when a corporation pays dividends, the corporation doesn’t get a deduction for that.
Toby: Corporation makes $100,000, being taxed at a flat 21% this year, so there is $79,000 to pay out if it chose to because it’s crazy and it pays out a dividend. We probably have less than 10 clients in total that pay out dividends. It’s rare that you see dividend-paying companies. If it’s big, it probably does. Otherwise, you’re probably zeroing that puppy out or you’re just keeping that income at a lower tax bracket.
Let’s say you did pay it out, you’re going to pay the 21% plus that $79,000, it could be at zero. If that was your income and it was married filing jointly, you’d have over $80,800 that you can receive the 0% or it’s being taxed at 15%. Regardless, it’s not like you’re getting shellacked. The math on that would put you right around the 35% or 36% mark, so it’s not that much different than if it had just hit you personally in one of your higher tax brackets. In fact, it may actually save you 1% or 2%.
But that’s not the big just to this one. They’re looking at a C-Corp versus an S-Corp versus an LLC. Let me dispose of the LLC and then I’ll throw you the C-Corp versus S-Corp. LLC is not a tax designation. There’s no such thing as an LLC tax return. The LLC, you tell it–it being the IRS, the government—here’s how I’m going to treat it from a tax perspective.
You either say I’m going to ignore it. so just look at my return if I’m the owner. You’re going to say tax it as a partnership if there are two or more owners and you don’t want it to be taxed as a corporation. Or it’s going to be taxed as a corporation. The default is a C-Corp or I could choose to have it flow onto my return, which is an S-Corp. Those are our choices.
When you say LLC, let’s just throw it out, that’s something that the state creates. LLCs don’t exist to the Internal Revenue Service. They just close their eyes and go I don’t understand what you’re saying. The only words I understand are a partnership, S-Corp, C-Corp, or just ignore it. You keep saying LLC, they’re not going to understand what you’re saying. This would be an LLC taxed as an S-Corp or C-Corp. What are the big differences between an S-Corp and a C-Corp from a tax perspective?
Jeff: I know they both have Corp in their name, but I really don’t find them that comparable. The S-Corp for me is really more akin to a partnership. It has stricter rules about who can be shareholders of your S-Corporation. The S-Corporation is a pass-through and it passes through its income expenses and so forth down to the shareholders. A C-Corp is its own entity, its own being. It gets tax itself and can pay—like we were talking about earlier—dividends to the shareholders, or salaries, or have transactions with shareholders.
Toby: There are two big differences from a tax standpoint. You hit the big ones. S-Corporations flow onto the owners’ returns, there are limitations and who can be the owners’ natural people. There can be up to 100. There’s one class of shares. C-Corps allow for more complexity. The S-Corp flows onto your return, the C-Corp pays its own tax. It’s the easiest one. There are a couple of other things that C-Corp can reimburse employees medical, dental, vision, long-term care coverage, 100%. It’s not taxable to the employee.
S-Corporations, if they cover medical expenses, it’s taxable to you and then on your personal return, you’d write off the insurance premium. They’re not apples-to-apples. There are some subtle differences besides the flow-through. You can write off more with the C-Corp than you can with what’s an S-Corp. People sometimes miss that.
A lot of folks—accountants instinctively—I think go towards the S-Corp because everybody that’s gone through school in the last 25–30 years, learned double taxation can be devastating because like Jeff said, the corporate tax rate used to go up to 39%, then you’d have ordinary tax on whatever your highest bracket is. You could get literally crushed from a tax standpoint, if you made too much money in a C-Corp. The rule of thumb was S-Corp until proven differently.
Everybody’s situation is different. I don’t think there’s one size fits all. If you’re looking at a corporation, you really ought to be looking at talking to somebody to make sure you’re picking the right methodology for you. Plus, depending on what you’re doing, if you’re a real estate agent, a doctor, an architect, or something with a license, you may have restrictions just because of your license is to how you could structure. You may not be able to be a C-Corp.
Jeff: Can I give some general what I like? I like the C-Corporation if I’m doing flipping. I like flipping in the C-Corp. If I’m managing any of my business, including real estate, I want to do that from the C-Corp, not the S-Corp. And there are other times. With the S-Corp, I’m looking for the S-Corp to be running my business. That is I will use RAL (Residential Assisted Living). I’m actually putting the operations of that business in an S-Corporation while keeping the property separate from it.
Toby: It has at least between the two. Somebody says what is the best option for a lawyer? Probably going to end up having to be an S-Corporation because of your licensing. Generally speaking, they want to see it. Most states may or may not have a restriction, so you just have to check with your […]. Generally speaking, you’re going to start with an S.
Here’s one thing. You have something called 199A. It’s this 20% deduction that flows through on partnership, sole proprietorship, and S-Corporation returns that could actually lower your income by up to 20% of the qualified business income (QBI).
Jeff joked I have three rules—calculate, calculate, calculate. Let’s make sure that we’re not screwing ourselves up by something. Have somebody who knows what they’re talking about actually do some of the analysis and know that it’s easy. Every year, you could change your C-Corp to an S-Corp. You go from an S- to a C-Corp, you have five years that you have to sit on your hands, and you can’t do anything.
If you’re starting out, you’re by default a C-Corp. You may or may not want to in the first year, just do a wait and see, unless there’s a compelling reason to go right to the S. Let’s go to the next one. A few questions out there, but our guys are just hammering away. Dutch, Christos, Piao, Troy, Matthew, Dana, and Eliot, are all just cracking away. Did I miss anybody?
Jeff: There are so many of them out there.
Toby: There’s a lot of them. Who else? Did I screw something up? Did I just say Dutch? I know Dana. Yeah, I think I got everybody. And then there’s us. We’re not doing much.
All right. “I’m starting a boat rental business. Is the purchase of the boat able to be written off the first year or can it be spanned out over five years?”
Jeff: Yes. Actually, the default will be an expense in the first year, but you can elect out of bonus depreciation and take it over five years if you choose to.
Toby: Caveat. You got to use it more than 50% business. Otherwise, it’s going to be deemed personal.
Jeff: I’m going to caveat your caveat.
Toby: Do my caveat of the caveat of the caveat.
Jeff: If you’re going to have a boat rental business, I would not use them for personal use at all. It’s going to taint the whole thing.
Toby: And you’re taxed on personal use. The way the IRS treats it is, hey, I have a business asset and this is listed property. This is something that they’ll probably look at. If you have 70% business usage, they’re probably going to want to see the records. If you have 30% personal usage, they’re probably going to want to make sure that you’re paying tax on that portion that was allocated over to you. Technically, if you’re using it 70%, you get 70% of the write-off.
Jeff: I would imagine it’s similar to airplane usage that they’re going to want to check your logs. They’re going to want to compare engine time to how much use you have.
Toby: What you said is absolutely right. If you’re going to rent a boat, don’t use it. If you do, make sure you document it anytime you use it personally.
Jeff: You probably want to consider not using accelerated depreciation, definitely not a bonus if you’re going to have personal use, and it just takes straight-line depreciation.
Toby: If that first year, you use it 100%, you write it all off, and then you have future years where you’re using it personally, just now that there’s going to be a tax implication to you. If you’re doing it, you say this first year, I’m going to use it. You dropped below 50% and the first year, you used that 100% for your boat rental. Then in year two, you make it all personal, you’re going to have to recapture that entire amount.
Let’s go to the next one. “I own a childcare center that is set up as a corporation and taxed as an S-Corp. It has a line of credit of $150,000. I am a new real estate investor and would like to know if I can lend those funds to myself to purchase a house to BRRRR or fix and flip?” BRRRR just means buy, rehab, rent, refinance.
Jeff: Then start over and repeat.
Toby: Then repeat it.
Jeff: I’ll go with the tax and accounting side. Yes, you could do this. I would make sure there are promissory notes between the S-Corporation and whoever it’s borrowing money to. I’d want to have that all laid out. There’s no reason you couldn’t do that with a fix or flip or buy a rental property. You do have to plan on repaying that money to the S-Corporation.
Toby: Document it and then honor the document.
Jeff: Yes. My one concern is if there are stipulations in the loan documents on the line of credit that it needs to be used for the childcare service and not paid out to somebody else.
Toby: Yeah, you look at the bank, but it’s cash. Even though you have a line of credit, if there’s not a restriction on it, and most don’t, they say it’s for business use, put it in the business. If you want to distribute it out to yourself, you could do that with one caveat. That caveat is if you aren’t on the hook, if you don’t have a basis, and you take out $150,000 of a business, you may have long-term capital gains.
The safest route is to loan it because then there’s no tax implication at all. If you have plenty of basis in your S-Corp—and you would know by asking your accountant—and you have a line of credit there—because people do this all the time, they’ll take money out of their business—just distribute it to yourself.
It’s not a loan. I’m not going to pay it back. The company is going to pay back my loan, which is fine. I just want to cash out of my business. A lot of businesses do that. They’ll borrow against their assets so that they can pay and distribute money out to the owners. Not uncommon, you could absolutely do it.
Then you could use it for anything you want. You want to go buy a house with it, you want to go buy a boat. We have a follow-up question on the boat. You can do anything you want with it.
Jeff: At that point, based upon what you say, the only thing you need to make sure you have is a plan to at least pay the interest on that loan, if not make payments down towards the principal.
Toby: Pam has a question about the boat. “What if you buy a boat in your personal name and you use it for more than 50% for business? What’s the implication there?”
Jeff: You would have to somehow value the reimbursement.
Toby: Well, she bought it. “I bought it for $100,000. I used it 60% of the time for business.”
Jeff: I’m thinking for vehicles, you’re reimbursing based on mileage, but you’re not going to have that.
Toby: How do you track it? It’s going to be by hours, I think. You’re going to have to document the usage, keep a boating log, which days you used it personally, which days he used it. Let’s say that you’ve rented it for 50 days and you used it personally for 10 days, then you’re going to have that ratio and it can reimburse you tax-free and take the deduction.
The big thing, Pam, is to make sure you have the proper insurance, make sure that they understand that you’re giving that boat to somebody else to ride around on business purposes. If it’s in your personal name, just know you have a lot of exposure there.
As far as if third parties are on that vessel and they cause a problem, there’s exposure there for you personally. I would always suggest that you make sure that if you’re going to have a third party use something in a rental capacity, make sure there’s an LLC around it.
Jeff: I kind of feel like if I’m renting the boat out to other persons and I am not piloting the boat, I’m burying that boat in some LLC or something to protect me.
Toby: Even if I’m piloting it, I may have to refinance it as an LLC. Most lenders are happy if you’re on it, you transferred into the LLC, and the Coast Guard likes it when it’s in the LLC. If you’re going to be using it, it’s easier to sell that LLC than the boat by the way when you go to transfer it at some point. I’ve actually done that.
Somebody asked about 280A(g)(2). We’ve been talking about that now for 25 years. I think you’re referring to 280A subsection (g)(2), and yes, that’s the Augusta Rule for those who don’t know what it is.
“If a California resident owns a rental property and/or multifamily syndications in other states—Arizona or Georgia—with net operating loss and K-1 net rental loss.” This gets weird. Net operating loss indicates that it’s a business. Net rental loss indicates that there’s a rental business so that’s a rental property. I’m trying to figure out how they’re going to have a net operating loss. “Does he/she need to file an income tax return in those states despite the dollar filing threshold? Can he or she wait until they turn a profit capital gain to file cumulatively?”
Jeff: If I have properties in Georgia and Arizona, I’m going to head and file returns in those states. I don’t have to, you’re absolutely right, if I have no income in the states, however, what I want to make sure the states know is that I have losses in those states. I’m going to grab them and accumulate them because what you can’t do is go back later and file it. You have the cumulative results that say why you lost $10,000, $10,000 but made $100,000 so my profits are only $80,000. Each return is only for that year. You don’t have to, but I would strongly suggest doing it. It’s not that expensive to do.
Toby: The other thing you have is when you have a syndication, they may be filing the state return on behalf of all the partners.
Jeff: I know what you’re talking about.
Toby: Yeah, they’re doing a consolidated or whatever that’s called.
Toby: I know there’s a special word for it, a term of art, but they’re filing the return.
Jeff: Somebody put it in chat.
Toby: They always do. There’s usually an accountant out there who says, you guys, here’s the turn.
Jeff: Composite return.
Toby: Composite return.
Jeff: What a composite return is, especially on these syndications, is they are following this composite return on behalf of all non-residents of the state that they have to file in.
Toby: Yup, and that alleviates you from having to go on your K-1.
Jeff: They’re paying your taxes for you.
Toby: Which they’re not really.
Jeff: But taking it out of your money. I’m not paying your taxes for you.
Toby: Like, hey, you pay tax even if you don’t owe one. Thank you, Mr. Syndicator. No, I’m teasing.
Jeff: That’s generally true that what you pay in composite taxes is generally higher than what you would pay if you filed the return yourself, but then you don’t have to deal with a headache.
Toby: It’s on the return. We want them losses. I was going to say, speaking of losses. No, no. Hey, we have a bunch of events and training workshops. There are two that are coming up that I want to draw your attention to right away. The Tax and Asset Protection Workshop June 4th, or you could do the Infinity Investing workshop but on the same day. You get to pick your poison.
The Infinity Investing Workshop is for women only, I believe. Patty, is that women only for the investing only? I know we do these investing workshops that are women-specific. Then, we have the Tax and Asset Protection Workshop, which is on June 4th. If you want to learn about LLCs, corporations, trusts, tax strategies, and even legacy planning, we do that on June 4th as well.
I think Patty just shared out the link for the Tax and Asset Protection. You also want to share out the link for the Infinity Investing as well if you are interested in perpetual wealth over multiple lifetimes. We call it infinity because we don’t sell things.
While everybody else is freaking out about this market, we are going sale, because there’s a lot of revenue that you can buy, perpetual streams of income, that will last decade (if not longer) if you do it right. A lot of the companies we follow have been paying out increasing amounts of income for more than 50 years. I didn’t misstate that.
We buy long haul, like these companies that have been around forever. They don’t care about inflation. They’re like, what’s this inflation? They don’t care about interest rates, because they’re like, why would I care about interest rates? I don’t have much debt. They’re good companies.
For guys that are asking questions, make sure they go into question and answer. Unless you’re asking something specific to us on a question that we are answering, then put it in chat, or just comment it, like Jeff looks really good today. That’d be a good comment to put in chat.
“A US citizen wants to start a foreign business with a partner who is a foreigner,” I’m not going to say anything. Maybe I should. No. “Besides the foreign country rules for setting up the company, what is the best way to set it up so I do not have a US tax hassle? I would be a minority owner. What is the threshold for ownership to not have a US tax nightmare? What are the requirements? Do you have a video on the subject?”
Jeff: I’m going to start off by saying we’re not foreign tax experts. However, there are some things we can talk about. If you’re going to form a business that you don’t want having tax issues in the United States, you’re going to want something like a corporation. They can be called different things in different countries.
Toby: Every country has its own rules. The US has a real simple one. No matter where you make money in the world, it’s taxable in the US. We’re one of two countries that do that. They don’t care where it’s made. They don’t care whether you pay tax in that country. They’re going to tax it here.
If there’s a treaty, we might give you credit for the amount of tax you paid in that country. If there’s no treaty, then they don’t care. If you are working out of the country, there may be an exemption for your W-2 income or your active income that you earn in another country. There might be something there, but you are here. It says here, you’re here, and you’re setting something up and you’re worried about a US tax hassle. If you receive money, your chances are you’re going to be paying tax.
Jeff: We don’t want a passive entity. That’s going to be a problem for the situation.
Toby: What really matters is what you’re receiving. If you have ownership and an entity, you might be triggering reporting requirements. For example, under the FBAR regs, they want to know whether you have control over funds overseas. There may be a triggered requirement if you’re a signer on something. If you’re not a signer on something, then I suggest that you wave at some of that money and kiss it goodbye, because we see this over and over and over again.
Again, we’ve been doing this. You’ve been doing a lot longer than I have. But many decades, over and over again, you see US taxpayers invest in things in other countries, unbeknownst to the US taxpayer, they don’t have very many rights in that other country, and the monies go missing over and over and over again.
It’s always somebody, like this one’s different. This company has been around. I know these people that are really great. Invariably, you don’t have rights unless you’re going to fly over to that country, you’re going to engage the equivalent of an attorney in that country and avail yourself to the courts, depending on what exists in that country. It can be a very disturbing process for you.
Jeff: I don’t know that I would want to find a business partner who lives in that country and the entity is formed in that country. I just feel that I’m starting out a well-losing position.
Toby: Yeah. I think that what we’re saying is, regardless if you’re making something on it, it’s going to trigger US reporting no matter what. If you have access and control over funds and you have more than a de minimis amount of shares, and especially if you’re on bank accounts, you may have reporting requirements just because you have control over foreign assets.
Jeff: Right. We talked about the FBAR. There’s also FATCA requirements that if you have certain financial interests outside of the United States greater than… It’s not $10,000, but…
Toby: Somebody was just putting it in, I think, in the chat. 9.9?
Jeff: Yes. And failure to report these interests is hugely expensive. The penalty started at $10,000 per incident.
Toby: FBAR is a percentage of your account value.
Jeff: Yeah, if they find willful disregard, they can take half of your financial.
Toby: Per year?
Toby: Yeah, we had a gentleman that we inherited. It was a big firm, too. They missed off $70 worth of interest on a Canadian account, US resident, Canadian, just across the border from where. It seems like a small deal. It cost him $37,000 for $70 of interest.
He was lucky because they cut it in half. It could have been worse, just because they had a bank account sitting in a foreign jurisdiction that they failed to report. They actually did it under the amnesty program. It’s a real kick in the shin and stuff. Again, not to scare you away from investing foreign, but you probably want to do just shares in a company and keep your involvement to a minimum.
Jeff: No salary?
Toby: Yeah, and just recognize that a large amount of ownership could trigger disclosure. Even if you’re not having income or control over funds could trigger reporting, even though you don’t have any income.
Jeff: You really shouldn’t talk to an attorney or CPA who knows the rules in the country where you’re planning to do this.
Toby: Absolutely, 100%. You got to have somebody in that jurisdiction that knows what they’re doing, because the rules are different. Mexico is different than Canada, which is different than, somebody was talking about Croatia. You just keep going through the list, so you want to make sure that you have somebody in that particular jurisdiction that’s advocating for you.
If you don’t, I’ll save you some money. Don’t do it, and then goofy things. Sometimes they’re just tax assets. I’ve had a lot of clients that like to invest internationally on real estate. I think it was […], where they just got hit one year.
It was like a 30% tax, so boom. Guess what, you have to come up with the cash. And you’re like, it’s not fair, it’s not fair. You availed yourself to that jurisdiction. If they want to hit you on something, they can. You’re subject to their rules, so just do it with your eyes open.
All right. “I bought a property for the purpose of subdivision without renting it out in 2016, and didn’t report it on my tax for depreciation or any other deduction. Can I catch up on all depreciation for 2021? I filed an extension with cost segregation. Not a bonus. I know, without going back to amend prior to your tax return.” What say you?
Jeff: If this property has never been rented out, there is no depreciation to recapture. That’s the wrong word. There’s no depreciation to catch up.
Toby: It says 2016, so I’m going to assume that they’ve never rented it out until this year.
Jeff: If you have rented it out sometime in the past, say 2020, 2019, how depreciation works is depreciation doesn’t start until the property is placed in service.
Toby: Or available, right?
Jeff: Yes, available for, in this case, rent would be considered being placed in service.
Toby: Yup. That’s the trick, timeout. You don’t start depreciating until that property is ready for somebody to use it. If you buy a property and you’re going to rehab it, you don’t get depreciation. That’s why some people will say, buy the beater with people in it, keep people in it, and then do a rehab in a future year.
You can still cost seg that property. Cost segregation is a fancy way of saying breaking up the structural components, which is 27 ½ for a 39-year property, versus the 15-, 7-, and 5-year property breaking that out, like driveways, fences, even carpeting, linoleum, cabinets, specialty plumbing, all electricity, electric, specialty electric. All those have a much shorter period of time where you can take a bonus.
The individuals mentioning bonus for 2016, that’s the rule that you would have to apply if they didn’t have bonus depreciation. They wouldn’t get it. If you did, then you would get it.
If you do, I wouldn’t worry about tenant improvements and things like that. I would just say, hey, if you haven’t had it available for rent just because you say, oh, shoot, I’m missing out on depreciation. It doesn’t mean you get to start taking depreciation. It starts once it’s available for someone to occupy, use, or when somebody actually rents it in that while.
I always just find this stuff fast standing in between it. If you have a vacant property, you don’t get to create a loss anyway. There are a few unknowns in this one that we would need to know to give you true guidance. If I have a property that I was going to subdivide and it’s just been sitting empty, you’re not depreciating. Sorry.
Jeff: If you do have depreciation that needs to be caught up, you can do that in the current year. You don’t have to do the cost segregation. It is a change of accounting method, just like the cost segregation would be, but it’s done in the current year. It’s a depreciation adjustment.
Toby: I do want to say one other thing here real quick. We are assuming that there’s a depreciable property. If this is land, so you say I bought a property and it’s really just land, you can’t depreciate land, so it’s all for naught anyway. Until you build stuff on it that we worry about depreciation.
This is, hey, I have some land. I’m going to subdivide it. I’m going to put some infrastructure in it. Can I do any deductions? Once you put some infrastructure in, you could possibly. There are some ones we got.
Pretty much everything you put onto it, you could write off. That’s if you’re doing mobile home parks and things like that. You’re building all the pads, putting in infrastructure, and electricity. You could probably bonus depreciate a lot of that and write it off in year one, but you can’t do anything with just land, just by itself.
Jeff: Yeah. When you mentioned the purpose of being subdivision, that makes me feel like there’s nothing there.
Toby: There might be nothing there, in which case, some people think. They don’t realize. It can’t depreciate land. Land has no useful life or never loses its life. This coffee cup might have a useful life. Or better yet, the cell phone. The cell phone, the IRS will say, will last five years. Mine might. Two years and it’s looking pretty ugly, but the IRS will say that’s its useful life. On a piece of property, if it’s residential, they say it’s going to last 27 ½ years. If it’s non-residential, they say it’s going to last 39 years. If it’s a hotel, 39 years.
I can’t deduct land. No, you cannot deduct the land. You get to deduct what you build on the land, because that’s what could fall over. We just ruin somebody’s day. It’s like, you got to be kidding me. What? I can’t deduct land? No, you can’t deduct land.
All right, here’s one. “We’re receiving IRS notices. I received a notice from the IRS asking me to pay taxes on money withdrawn from my retirement under the Cares Act in 2020. I thought I had three years to pay the money withdrawn in 2020, which means I still have 2022.” You have 2020, 2021, and 2022 to pay back the money. “How do I proceed?”
Jeff: Both you and the IRS are correct. You do have until 2022 to repay this distribution. However, IRS technically wants you to pay taxes on a third of that distribution each year, 2021 and 2022. Their assumption is you ain’t going to pay the distribution back.
Toby: Jeff, and I had this discussion when the Cares Act was passed. We like to make fun of them for stupid things that they did. There were some that got clarified in future legislation, but this was one that I think is stupid.
The IRS says you can take money out of your retirement account and not pay penalty. You pay the tax, only if it’s not put back into the account by the end of the third year. In fact, they said it’s treated like a rollover. If I roll over money from an IRA, I have 60 days.
Let’s say I take the money out of my IRA and I put it in another qualified plan, or better yet, I leave employment and I say to my employer, I want to roll my 401(k). They write me a check for $50,000 or whatever it is that’s in there, they’re going to issue me what’s called a 1099-R.
I am going to take that money and I’m going to put it into another retirement plan. As long as it’s done within 30 days, no harm, no foul. It’s a rollover. I report that on my return as, here’s the distribution that I took, and how much of it is taxable? I say zero.
The IRS wants us to treat the money from the Cares Act as though we took a third, a third, a third. Let’s say that I took out $100,000 from my retirement account. They want me to pay tax on $33,333 in 2020, $33,333 in 2021, and $33,333, in 2022. Then if you pay it back by the end of 2022, they want you to go back and amend the previous returns and say, hahaha, it’s not taxable.
I think Jeff, you and I would agree. If you pay it back this year, file it. I would go back and I would say I have no taxable. They’d want you to go back and file that return, report the income, but show it as zero taxable. But you got to make sure you pay it back in 2022. If you don’t pay it in 2022, you’re going to have the penalties and interest from that first third penalties and interest from the second third for 2021, and then you will have the tax hit in 2022.
Jeff: I have a feeling, since he’s already getting notices, they want the tax now. They’re not going to wait. If he doesn’t report that $33,000 of taxable income, they’re going to come after him.
Toby: It’s goofy. They’re going to make him file a return, and then go back and amend it. Technically, that’s what you’re supposed to do. You’re supposed to report it on your 2020 tax. They’re going to say your penalties and interest, and then you’re gonna go back and amend it, and then you’re not going to owe anything.
Jeff: I never understood that I took that distribution in late 2020, and then four months later, I had to pay the tax on it.
Toby: That’s why we said that that was done in the way that they’re interpreting. The IRS gets to interpret things. It’s the treasury. Congress makes the rules, and then they say, here’s how we’re going to treat it. They’re treating it under the rules that were in place after Hurricane Katrina.
What they just basically said is they did a punt, hey, we’re going to treat it like we did the relief that was done under previous laws, without really thinking about what it meant. Frustrating, I know. What Jeff’s saying is pay the tax, get them out of your hair, and then go back and amend it, and they’ll give you a refund. Just don’t paper file here.
Toby: Do not paper file anything. The IRS got caught shredding $30 million tax documents because they’re the treasury.
Jeff: Fine, we don’t need them.
Toby: Yeah. Literally, they had truckloads of documents that were paper files and they said, we can’t process these, so they destroyed them. The Treasury Inspector General caught them two weeks ago or last week.
Jeff: The commissioner said he was going to get them caught up.
Toby: A secure email box. I haven’t answered any emails in three weeks. Delete. I answered him.
Jeff: I am all caught up.
Toby: Yeah, I gave it the single finger salute. It’s the government, so it’s okay.
All right. “I bought a house in 2015. I lived there for about two years, and then I moved out of state. I let my cousin stay and take care of the house for me. I recently refinanced the house with a cash out option. Now, the new loan is under rental property,” I have no idea what that means. He must have lived in it for 2 years, so 2015, 2016. In 2017, cousin lived in it as personal property, so you probably couldn’t do depreciation or anything. It’s just a family member. “And now it’s a rental property in December of 2021.”
How many years? We have six years of non-rental usage. My question is, can I convert the house back to a primary home and still qualify for the exclusion when I sell my house in the future? I paid $600,000. It sounds like the basis and the value is 1.2. The big question is, what if I make it my personal residence again? What could I avoid from a tax standpoint? What do you think?
Jeff: You’re going to have to live in that house again for at least the next two years. That will give you the section 121 exclusion. If you’re single, it’s $250,000. If you’re married filing jointly, it’s a half a million dollar exclusion. That still leaves you a sum gain. You could get rid of the rest of the gain. But I want to go here with Section 1031 by converting it back to a rental property again.
Toby: Let’s go over what it is now. It’s an investment property. You could avoid the entire tax hit and there’s no recapture. There are some recapture. We have December of 2021 to today.
Jeff: Yeah, I was putting the […] in front of the […].
Toby: Right. We could avoid all of the tax if you 1031 it. If you don’t 1031 it, now we have to worry about periods of non-qualified use, which really would only be the period of time that you rent it. You’d have all the years that you own that house, so 15, 16, 17, 18, 19, 20, 21. We’re in 2022. You’d have a portion of it, that’s disqualified use.
If you made it your personal residence for two years, we would have a small portion of the gain that would not be able to be used. I will just say this, based off of these numbers. If you’re married, you get a $500,000 exclusion. Period. It’s not the exclusion that they subtract against, it’s the gain that they subtract against.
They might say, you used it as a rental for 1/10 of the time. If the gain is $600,000, you’d lose $60,000 of it. You’d have $540,000 of eligible gain to offset, and you could use your 121 exclusion against it, and then your basis would step up, too. Not to get into the weeds, but they could absolutely do it. Did I say that right?
Jeff: I’m just thinking about what you’re saying that if you want to get rid of it now and it was investment property, you could 1031 it.
Toby: The period of disqualified use is only if you’re making it into an investment property. I’m going into the recesses of my brain on that one, but I’m pretty sure I’m right. It’s not when I let my cousin stay there. Since they’re a family member, that would still be considered personal use, but it’s not your primary residence. I can have three residences, and I can only have one of them be my primary at any given time.
Technically, I could have three houses. I lived in this one, two years. Moved into this one for two years. Sold that one, used the exclusion. Moving to this one, two years. Sell this one, we used the exclusion again. Wait two years and sell that one. I could just be getting an exclusion every two years and I’m good.
If I rent them out, there’s going to be a period of non-qualified use, unless it occurs in the two years after I lived in it as my primary residence. If I live in it for 10 years, rent it for 3, sell it, I’m okay. But if I rent it for 10 years, living it for 2, I’m not. I’m only going to get 2/12 of the gain, and would be eligible for capital gain exclusion.
I’m sure I just lost 99.9% of them, but just know that it’s something you could just call your accountant on it and they’ll be able to tell you, oh, you say calculate, calculate? Because it gets a little muddy, but we like mud.
All right, Jeff. Speaking of money, “I own a rental property for 27 years. If I move back into it and make it a primary residence, then sell it after three years, can I legally avoid depreciation recapture on the sale?
Jeff: Do you remember what we were just talking about in the last question? This is where it all goes wrong.
Toby: Just say no.
Toby: This is a Nancy Reagan.
Jeff: The property has fully depreciated, so you probably have no basis on it. You’re going to have a large gain. Now you could section 1031 this property.
Toby: You could trade it, only if you don’t make it into your primary residence. You can only trade a 1031 exchange property if it’s an investment property, so do not move back into this house. I would exchange it, so you don’t have any tax or recapture. You don’t have any capital gains or recapture tax. You’re going to be recapturing the entire thing.
If this thing was a valuable property, you’re eating almost all of it. The only thing you don’t pay tax on is the land value, and that’s its original land value. If you don’t want to pay tax, do not move back into it. If you move back into it, do not sell it until you’ve made it back into an investment property.
You have a period of 27 years of disqualified use. If I live in it for 3 years, the only amount of gain that is eligible for the capital gain exclusion is the relationship between 30 years and 3, so 10% of gain would be eligible.
If there’s a million dollars of gain, $100,000, I could avoid tax under this scenario if you had it for 30 years. And that stinks. It doesn’t get really much better over time. Like, forget about it. What I really want to do is 1031 this and the other properties. That’s me being cranky.
All right. “I am 67 years old. I do a Roth 2022 conversion. Can I commingle the Roth conversion into an existing Roth self-directed IRA,” That just means it’s not in a regular brokerage house. There’s a company that allows you to invest in other things, so Roth, self directed IRA. “Are there any potential negative consequences to doing this? Does the five-year rule reset for the entire Roth or just the conversion amount?”
Jeff: Yes, you can commingle Roth funds conversion, inherited Roths, and existing Roths that you contributed to. Are there negative consequences to this? Yes, because it goes into the five-year rule. You have three different five-year rules for contributions, for conversions, and for inheritances. Each conversion gets its own five-year period. If I convert it today, today is May something, the clock would start on January 1st of 2022.
Toby: Yeah, and it’s not like you’re going to get ravaged. It’s not going to reset the money that you’ve already had in there for five years. On the money that you converted, you already paid tax. What you’re really looking at is the 10% penalty, plus tax on the growth. If you had two years and you had a little bit of growth, then you’d have some tax implications on that, plus a penalty. It’s not like Uber.
Jeff: I’ll tell you what, I probably would keep them in separate accounts, I’d have a conversion account and my contribution account.
Toby: Or just track it. If you’re going to commingle, you’re going to have to say this portion. On this date, I brought them together. The value of the account was X, here’s the growth. By the way, they count the conversion as of January 1st. Even though we’d be doing it, hey, I did a 2022 conversion, they haven’t done it yet.
Let’s just say they did it before the end of the year, it’s like they did the conversion on January 1st. It’s not really five years, it’s really like 4 ½ years for you right now. But 67, I’m sorry. When you convert, it takes about 30 years to make up the conversion.
Jeff: When will be a good time for him to convert? He doesn’t have any other income this year.
Toby: Yeah. If you have really low income and you’re not going to pay much tax on it, maybe convert. Here’s the rule. You only convert if your tax bracket is going to go up when you retire. Otherwise, it doesn’t make a lot of sense.
For young people, it makes sense because they’re in a really low tax bracket. If you have teenage kids, they’re 18, 19, 20, they’re not really paying any tax anyway. Let’s say that it’s your 20-year-old and they made $20,000 last year. They had a $12,950 standard exclusion, so they’re paying tax on $7000 at 10%. They can drop $6000 into a Roth, they’ll never pay tax again on it. That’s good.
Jeff, Mr. Rich guy here converts his entire 401(k) of a million dollars into a Roth. That’s not really bright. He’s in the highest tax bracket, he’s going to get torn apart. and it’s going to take a long, long time. I’m just pretending on you, but let’s just say it was a million dollars, that’s going to put him in the highest tax bracket. Most of that’s going to be 37% money.
Even though we’re in Nevada, where we don’t have a state income tax, 37%. How long is it going to take him to make that back? Even if he’s a great investor, it should take him about 25 years to make that back. It’s stinky, and our internet connection just says unstable. That’s weird. Anyway, we’re getting pretty close today.
Jeff: One other thing that seems to be a misconception is, if I do a Roth conversion of my traditional IRA, I don’t have to convert that whole thing.
Toby: Yeah, we had a little thing that says that Jeff’s unstable.
Jeff: I’m off my meds.
Toby: Yeah. All right. Let’s go. Somebody says, “For the Roth conversion for the near term, they’re saying the tax rate is low now but planning to go up.” I just say you should be really, really intelligent about it. If I had a year, where let’s say I’m a real estate professional and I have some losses that I’m going to take, that’s the year that I’m converting. If I’m in a low tax bracket and I know that when I retire, I’m going to be in a higher tax bracket.
Jeff: I’ve been doing this long enough that when they say something’s going to happen in tax, I take the position, I’ll believe it when I see it.
Toby: Yeah. Here’s the stats. When you retire, your average tax rate is going to be about 12% to 15%. That’s the stats. When you’re working your katush off and you’re making money, your average tax rate, all taxes considered, is 29%.
Statistically speaking, you’re going to pay less tax when you retire. I tend to go like, why are people converting when they’re in their prime years? It’s going to take you forever to make that backup.
Jeff: We did a presentation in 2012 when it wasn’t big. They were changing things. The law was written. We did a presentation on the possibilities. They changed it all, so you can’t rely on it.
Toby: Somebody says, “I was told if I converted and created a new Roth account, there was no five-year hold because I already had a Roth account that was over five years. Did I understand you correctly?” That’s not true. I don’t think that’s true.
Jeff: The rule is, once I create a Roth contribution account, if I create another Roth contribution account, it relies upon your first Roth. The five-year period starts with your first contribution account. Conversions don’t work the same.
Toby: Think about it. I could start a Roth account, put $3 in, and then I can revert $100,000, and I’m going to say, hey, I don’t have to worry. Maybe there’s something weird about there, but I’m not aware of that. Elliott or anybody else, do you guys know? Have you ever heard of that? Because I don’t want to tell somebody something and ruin their day.
Eliot: Yeah, Jeff was correct in what he was saying. There is a little bit of difference with conversions. If you have a contribution in your first Roth you did 10 years ago, that sets it up all the future Roths for regular contributions. Conversions are a little bit different.
Toby: Yeah, it gets kind of weird. If you’re going to contribute in the future, you’re good. But if you’re converting a traditional IRA or 401(k), I guess you could go with a traditional 401(k) or is it only an IRA? It’s going to be the same difference. You’re still going to pay tax on it. Then I think it’s that five-year reset. Is that your understanding?
Toby: It’s like Eliot, the voice from the heavens coming in and saving us. Hey, if you like this type of information or you want to watch a replay of the same Tax Tuesday, what were they saying last week, the week before, or I guess two weeks ago and two weeks before that?
We’ve done hundreds of Tax Tuesdays at this point. You can actually go crazy and see whether we’re consistent over time. I think we are, although I might not remember everything.
You can go on to our YouTube channel. You can go to our podcast channel. If you’re platinum, you have it in your portal. But YouTube, again, I strongly encourage you to go there, because I’m always putting new videos up. I shouldn’t just say me. I record them, and then we have a great team that puts them together and edits them, and makes them palatable on a lot of topics.
They take our Tax Tuesdays, and break them down as well, and put them up there. You can do that. If you have questions, we answer hundreds of questions a week. It’s tons of stuff that’s coming in.
You can do firstname.lastname@example.org and send them in. That’s where we grab our questions for the week, by the way. There are a lot that come through, and they just throw them on a spreadsheet, and they say, Toby, grab some of these questions. I usually just grab the top 10, 15, or whatever I feel like grabbing that particular day, throw them out there, and say, let’s do it.
Yesterday, I grabbed them yesterday afternoon because they were yelling at me. And I said, here are the questions that we’ll go through. I try to keep them light. We don’t want to answer the same question over and over again. It’s about as quickly as I analyze it.
A few more questions coming in. They answered over 100 written questions during this last hour, which is fantastic. Thanks. Where else can you get that, where an accountant is not just going to give you a love letter that says $300 an hour for answering your questions?
Troy, thank you. Dutch, Dana, Ian, Christos, Piao. A lot of really good tax professionals on, guys. You’re not getting somebody that’s just pretending to be a tax professional. CPAs are experienced accountants and experienced attorneys.
Thank you to our staff, because we don’t force them to jump on and do this. They like to pop in. I think we all like to answer questions and not feel like when you do it for no pay, it’s something satisfying.
If you think there’s anybody else that you know that could benefit from this type of information, by all means, share some of the last or some of the Tax Tuesdays with them or invite them on. They’ll see that we’re actually real and that we do answer stuff while we’re sitting here. We answer it live.
I have a chat, Q&A open, and then the cameras over here, and the presentations down here. We’re always just kind of glancing around, because we’re reading different screens, except for Jeff, who just answers. He just answers all the questions. Thank you for doing it today, brother. I appreciate it, unless you have anything else.
Jeff: No. Sometimes, I don’t even read the questions, I just answer them.
Toby: Yeah, it’s even better. I have to read it, but I suck at it. We will see you again in two weeks.
Jeff: Have a good one.
Toby: All right, guys.